Rogers Communications Inc. (RCI/B), Canada’s largest wireless carrier, reached a 12-year, C$5.2 billion ($4.9 billion) deal with the National Hockey League for broadcasting rights in the country starting in the 2014-2015 season.
The pact marks the first time the NHL has granted all of its Canadian rights to a single broadcaster, Toronto-based Rogers said in a statement today. The deal is subject to approval by the NHL’s board of governors.
Rogers and main rival BCE Inc. (BCE) are vying to own more programming, especially sports content, that they can repackage and sell to customers to watch on tablets and smartphones. The two companies teamed to buy a majority stake in Maple Leaf Sports & Entertainment Ltd. in 2012, giving them joint ownership of the Toronto Maple Leafs, the NHL’s most valuable team.
“Bell was clearly outbid by Rogers,” Dvai Ghose, an analyst with Canaccord Genuity Group Inc. in Toronto, wrote in a note to clients, referring to BCE by its brand name. BCE didn’t hold national broadcast rights in the first place, and it still has deals to air regional match-ups, including 25 to 30 Toronto Maple Leafs games and three-quarters of Montreal Canadiens games, Ghose said.
Rogers said that it reached separate sublicensing agreements with the Canadian Broadcasting Corp. to continue to broadcast its traditional “Hockey Night in Canada” program on Saturdays, and with Quebecor Media Inc.’s TVA for all French-language national broadcasting rights. Rogers, which owns Sportsnet cable television, will provide game coverage and as many as nine channels.
“Sports content is a key strategic asset, and we’ve been investing significantly to strengthen our sports offering to Canadians,” outgoing Rogers Chief Executive Officer Nadir Mohamed said in the statement. He is retiring next month and will be replaced by former Vodafone Group Plc (VOD) executive Guy Laurence.
“It’s a game-changer for sports broadcasting,” Mohamed told reporters today in Toronto.
Rogers’s first annual payment to the league will be about C$300 million, climbing to approximately mid-C$500 million in the final year of the deal, according to the statement. Rogers said the cost of those payments will be defrayed by the CBC and TVA sublicensing deals.
NHL Commissioner Gary Bettman, speaking alongside Mohamed, said Rogers’s ability to clinch the rights was not just about price. “The Rogers people should be commended for their aggressiveness and strategy,” he said.
The NHL’s games are broadcast in the U.S. under a 10-year contract signed with Comcast Corp.’s NBC and Versus networks in 2011. That agreement was worth $2 billion, people with knowledge of the transaction said at the time.
Rogers slipped 1.2 percent to C$46.23 at the close in Toronto, the biggest one-day decline in more than a month. BCE fell less than 1 percent to C$46.54. Rogers has climbed 2.4 percent this year, compared with BCE’s 9.2 percent gain.
Programming rights don’t have much effect on telecommunications shares in Canada, Ghose said.
“This deal, and media in general, is not material for RCI’s stock price,” he said, calling Rogers by its ticker symbol.
Still, the deal represents a blow to hockey broadcasting on BCE’s TSN sports channel, said Bob McKenzie, a hockey analyst at TSN. BCE acquired TSN when it bought national broadcaster CTV for C$1.3 billion plus assumed debt in 2011.
“Obviously, it’s very disappointing for us at TSN,” McKenzie said in a message on his Twitter account. “We take great pride in doing NHL games and will continue to do so thru to 2014 NHL draft.”
Bell will broadcast 10 Leafs games next season and 26 games starting in 2015. It also has partnerships with teams in Montreal, Ottawa and Winnipeg, along with Hockey Canada, Scott Henderson, a spokesman for Bell Media, said in an e-mail.
“We submitted a bid we believed was valuable for the NHL and appropriate for our business, but were ultimately outbid,” he said. “We’re committed to TSN remaining Canada’s sports leader.
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